State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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Were pension-administration, retirement-plan recordkeeping, tax-form preparation, and benefit calculations taxable data processing?
No, when the administrator applied accounting principles or tax law as a professional service. Using a computer did not change that result. A mere service bureau that only processed returns and report…
How does Texas tax custom software, modifying purchased software, training, troubleshooting/maintenance, installation, and computer-run tax or payroll work?
Writing custom software from scratch (or modifying a program you didn't sell) is not taxable in Texas, and separately stated charges to instruct customers on using hardware or software are not taxable…
Were computer-consulting sessions and custom Lotus 1-2-3 templates or dBase III input and edit screens taxable?
Consulting was taxable when connected to taxable hardware or software the consultant sold. Creating templates or screens with the customer's own Lotus 1-2-3 or dBase III was nontaxable, but buying the…
Were claim-adjustment services sold to the National Flood Insurance Program exempt from Texas sales tax as a federal transaction?
Apparently yes, if the buyer was the federal government, a wholly owned federal corporation, or an unincorporated federal instrumentality and gave the seller an exemption certificate. Claims for priva…
Were membership dues collected by a professional or business Breakfast Club taxable as amusement services?
Yes. Texas treated the dues as taxable amusement services. The letter said the dues were exempt only if the organization or association was nonprofit.
Which plumbing labor, mileage, hauling, and equipment charges were taxable for residential, commercial, and new-construction work?
Residential repair labor and mileage and new-construction work were nontaxable. Total charges for repairing or remodeling nonresidential real property were taxable. Sales-tax-exempt organizations qual…
Were full-coverage roof warranties taxable for nonresidential and residential property, and was repair work taxed during the warranty?
A warranty on a nonresidential roof was taxable, with no further tax on covered repair labor or materials when the warranty paid the total nonprorated repair cost. A residential roof warranty was nont…
How did Texas tax wallpaper installation in new construction, additions, existing nonresidential buildings, and residential property?
Wallpaper in new construction or a new addition was treated as an improvement to realty. In existing buildings outside finish-out, nonresidential remodeling labor was taxable and residential remodelin…
Were fees paid to cancel noncancelable equipment leases early subject to South Carolina sales and use tax?
Yes. A fee paid to end a noncancelable equipment lease early was part of the lease's gross proceeds and sales price. Calling the payment a cancellation fee did not remove it from South Carolina sales …
Did a South Carolina savings and loan association have to collect sales tax when it sold U.S. Mint Constitution Coins as the Mint's consignee and federal agent?
No. The association sold the Constitution Coins as the U.S. Mint's consignee and agent while the Mint retained ownership, controlled price and recall, and received the proceeds. The sales were immune …
Were a South Carolina motor-vehicle dealer's sales to military non-appropriated fund instrumentalities exempt as sales to the federal government?
Yes. Sales to qualifying non-appropriated fund instrumentalities were treated as sales to the federal government and were exempt from South Carolina sales tax under section 12-35-550(42), effective Ju…
Did a North Carolina manufacturer owe South Carolina use tax when it sold equipment wholesale to an unregistered out-of-state distributor and drop-shipped it to the distributor's South Carolina customer?
No. The manufacturer's sale to the out-of-state distributor was a wholesale sale for resale and was not subject to use tax. The South Carolina purchaser was liable for use tax on the retail purchase.
Was a singles-referral service that interviewed and tested clients before matching them taxable in Texas?
No. Texas treated the described singles-referral service as nontaxable when it used interviews and tests to match people with others having similar or desired personality types.
When were real-estate appraisal fees taxable as insurance services rather than nontaxable financing services?
An appraisal was taxable when used to value damages or estimate the quantity, value, or extent of property loss. A lender-required appraisal whose primary purpose was financing a loan was nontaxable b…
Were environmental inspections of septic systems and water wells taxable in Texas?
No. Texas treated the described environmental inspections of septic systems and water wells as nontaxable.
Did a mortgage company's ownership make otherwise residential property commercial for Texas repair-and-remodeling tax purposes?
No. Property meeting the letter's residential definition remained residential regardless of who owned it. The definition included family dwellings, multi-family apartment or housing complexes, nursing…
Were sewer and drain-line cleaning services taxable for commercial and residential property?
Beginning January 1, 1988, cleaning sewer and drain lines serving commercial property was taxable. The same service for residential property was nontaxable.
Which boundary, title, residential, lot, right-of-way, engineering, and marine surveying services were taxable under Texas's 1988 rules?
Surveying to determine or confirm property boundaries or locate structures relative to boundaries was taxable, including boundary recovery, title, residential, as-built title, lot, and right-of-way su…
Under three different levels of New York contact -- no NY presence at all, an agency-like arrangement with an unrelated NY bank, and an actual NY office -- when does a mortgage banking company that packages and sells loans as FNMA/GNMA certificates become subject to New York corporate franchise tax, and how is its income sourced?
Under Alternative #1 (no NY office, no NY-originated loans, only a New York bank delivering certificates and collecting payment as agent) there is NO New York nexus; under Alternative #2 (using an unr…
Are dues to a golf and tennis club taxable when the club is corporately owned and runs private outings without members' consent, but members elect the board that manages it?
Yes — the dues are taxable and there's no refund, because the members elect the board that controls the club. Harold Rothberg argued that dues to the Canyon Club (a golf and tennis club) weren't taxab…
Was an exemption certificate printed on a specific purchase order acceptable as a Texas direct-payment exemption certificate?
Yes. The purchase-order certificate contained the required language and was acceptable under Rule 3.288, but it covered only that specific purchase order and no other purchases.
Were arson-investigation services taxable under Texas's insurance-services rule?
Yes. Texas treated arson investigation as a taxable insurance service effective October 1, 1987.
Which custom programming, software changes, data recovery, hardware setup, installation, training, spreadsheet design, and consulting services were taxable?
Many services were taxable when tied to hardware or software the provider sold, including custom programs, maintenance, installation, recovery, and troubleshooting. Separately stated training, nonprog…
Were demolition-site debris-removal charges taxable, and how did Texas treat a lump-sum demolition-and-removal contract?
Debris removal was taxable. A lump-sum contract combining demolition and removal was taxable on the total charge unless the removal portion represented 5% or less of the total contract price.
How did a Methodist church document its Texas sales-tax exemption for purchases, including parsonage bills?
Texas said all Methodist Church branches qualified under Rule 3.322(c)(3). The state did not issue exemption numbers; the church gave each vendor an exemption certificate, and the certificate required…
Is the service of pumping accumulated water out of a landfill's required liners a taxable real-property maintenance service, or a tax-free capital improvement?
It's taxable — pumping the water out keeps the landfill functioning, which is real-property maintenance, not a capital improvement. 110 Sand Company mines sand and gravel and also operates a landfill …
Were Easy Lift Chairs, Tub-Lifts, vertical wheelchair Porch Lifts, and electric-wheelcart Truck Lifts exempt therapeutic devices?
Yes, when sold, leased, or rented to an individual under a written prescription from a licensed healing-arts practitioner.
Was an annual contract to train and advise a company's emergency response teams subject to Texas sales tax?
No. The Comptroller said the service was not taxable where the provider trained and advised emergency response teams in firefighting, first aid, and hazardous-material handling and delivered no tangib…
Did a hospital auxiliary's gift shop need a Texas sales-tax permit and have to collect tax from customers?
Yes. The hospital auxiliary's gift shop needed a sales-tax permit and was not exempt from collecting sales tax from its customers.
Were bundled commercial-mortgage servicing activities taxable when debt collection was incidental and insurance work was limited to monitoring coverage?
No. The described commercial-mortgage servicing package was nontaxable. Occasional debt collection included in one charge remained nontaxable when it was less than 5% of the total, and merely monitori…
When were maintenance and repair charges on permanently attached fire-alarm systems taxable, and who paid tax on maintenance materials?
Regular scheduled preventive maintenance on a functioning permanent fire-alarm system was nontaxable, and the service provider paid tax on materials. Repair or remodeling of a nonresidential system wa…
Were vault-storage services taxable, could security contracts qualify as prior contracts, and was motor-vehicle storage taxable?
Vault storage was nontaxable unless the provider had to hold a security-service license. Security contracts shifting tax increases to the customer failed the prior-contract exemption, while motor-vehi…
Were delivered singing message grams taxable under Texas's newly enacted service-tax legislation?
No. Texas treated the described singing-message delivery as a nontaxable personal service not covered by the recently enacted legislation.
Were helicopter-ride charges taxable as amusement services when the ride occurred in Texas?
Yes. Texas treated helicopter rides as taxable amusement services when the event or service location was in Texas. Operators had to hold sales-tax permits and collect tax; admissions to services outsi…
Was a fixed-fee service monitoring only high water levels for an oil company taxable as security or telecommunications service?
No. Texas treated the described high-water alarm monitoring charge as neither a security service nor a telecommunications service.
When were flooring materials and labor taxable for residential work, commercial new construction, and replacement in existing buildings?
Residential and commercial new-construction installation labor was nontaxable while materials were taxable. Repair or remodeling of nonresidential real property was taxable on the total charge, and th…
Which mortgage-service fees for appraisals, loan conversion, returned checks, schedules, documents, statements, research, coupon books, and insurance were taxable?
Appraisals for mortgage loans, adjustable-to-fixed conversion fees, returned-check fees, frequent balance inquiries, and early policy-substitution fees were nontaxable. Amortization schedules, later l…
Which title-company searches, abstracts, insurance, amortization schedules, closing charges, tax forms, and delivery fees were taxable?
Abstracts, title runs, tax searches, plant information, copies, and amortization schedules were taxable information services. Title-insurance premiums, certain shared-premium title evidence, escrow an…
Were property-insurance claim measurement, documentation, investigation, and report services taxable when the policyholder paid the firm?
Yes. Texas treated the work as taxable insurance loss or damage appraisal and claims adjustment or processing. The result did not change because the policyholder paid a percentage of the settlement ra…
Was leasing compiled lists of unfavorable tenants to multiple landlords a taxable Texas information service?
Yes, on the described facts. Texas treated gathering current information about prospective renters, compiling it into lists, and leasing the lists to clients as a taxable information service. Creditwo…
Did an out-of-state credit-reporting vendor have to collect Texas tax on reports mailed into Texas?
Not if the vendor was not doing business in Texas. The Texas purchaser was responsible for any use tax due. The report was taxable when both the credit applicant and the requesting person's Texas conn…
Did Texas tax motor-vehicle storage without the owner's consent, and did licensing or general-purpose storage change the result?
Motor-vehicle storage was taxable whether or not the owner consented and whether or not the facility required a license. General-purpose storage was outside the provision when customers could store an…
Are annual fees for a computer service that matches investors with businesses seeking capital a taxable information service, or exempt personal information?
Yes — the annual fees are a taxable information service, because the matching reports aren't the personal, confidential information the exclusion protects. Venture Capital Network (VCN) of New York, I…
When a mutual savings bank converts to a stock-form savings bank in a transaction that's a tax-free federal reorganization, does the conversion end the bank's taxable year or otherwise trigger New York bank franchise tax consequences?
No -- because the conversion qualifies as a tax-free reorganization under IRC section 368(a)(1)(F) and New York has no separate modification for that kind of reorganization, Article 32 simply follows …
Were psychotherapist services subject to Texas sales tax?
No. The Comptroller said psychotherapist services were not subject to sales tax.
How did Texas tax a stadium's passed-through security and cleaning charges, employee security, cable fees, network services, and satellite uplinking?
Exact third-party security or cleaning pass-throughs required no extra tax when the contractor charged correctly, though tax had to be shown. Stadium-employee security, cable charges, network services…
Did Texas sales tax apply to tickets sold and delivered to out-of-state customers when the amusement event occurred in Texas?
Yes. Texas required sales tax on tickets sold and delivered outside the state when the amusement event itself occurred in Texas, and instructed the operator to begin collecting immediately.
Were swimming-pool cleaning, water testing, and chemical-addition services taxable when performed together or billed separately?
Yes. Texas treated pool cleaning and maintenance as taxable beginning October 1, 1987, and treated water testing and adding chemicals as taxable cleaning and maintenance whether separately performed o…
Was labor to demolish a building taxable as real-property repair or remodeling, and which rules governed mixed construction and debris removal?
Demolition labor was not taxable as real-property repair or remodeling. Rule 3.357 governed contracts combining new construction and remodeling, while Rule 3.356 separately governed garbage collection…
When did a law-firm investigator's work become taxable licensed security service rather than nontaxable employee wages?
Regular employee wages were nontaxable when the investigator qualified for the Act's employee exemption. Licensed or permit-required contract security work was taxable, including work for the law firm…
When did municipal utility districts collect Texas sales tax on residential garbage service billed with water and sewer charges?
A separately itemized garbage fee was taxable and the district collected and reported the tax. No tax was due when garbage service had no specific charge or when its fee was combined with other nontax…
Which bookkeeping, accounting, tax-return, financial-statement, payroll, billing, check-preparation, notary, and consulting services were taxable?
Bookkeeping and accounting work, tax returns, financial statements, notary work, and tax consultation were nontaxable. Payroll-return filing, W-2 and payroll-check preparation, computerized receivable…
Are construction materials that become part of real property owned by New York City or the Transit Authority — including land the Authority holds only by a permanent easement — exempt from sales tax?
Yes — materials that become integral components of real property of the Transit Authority or the City, including land the Authority holds under a permanent and perpetual easement, are exempt. Citibank…
Does computer-aided design and engineering equipment qualify for New York's research-and-development sales-tax exemption when it's used to develop more efficient production equipment?
It qualifies only to the extent it's used directly and predominantly (over 50% of the time) for genuine research, not ordinary design and drafting. Union Carbide Corporation produces atmospheric gases…
Are the charges a bank or credit union bills its customers for printing and delivering checks subject to Kansas sales tax?
Yes. Effective February 1, 1988, the full amount a bank, savings and loan, credit union, or other thrift institution charges its customers for printing and delivering checks became subject to Kansas R…
Were regular elevator maintenance contracts taxable, who paid tax on included parts, and could older repair or remodeling contracts qualify for prior-contract relief?
Regular real-property maintenance was nontaxable, and the provider paid tax on all materials used. A taxable repair or remodeling contract signed on or before July 21, 1987 could qualify for prior-con…
Were provider-controlled portable-exchange and automatic water-softening systems taxable equipment rentals or nontaxable services?
They were nontaxable services, not equipment rentals, because the provider retained ownership and control and performed all operation, maintenance, and repair. Billing equipment and service separately…
Was finish-out redone for the first actual tenant taxable after an owner had already completed speculative finish-out before leasing the space?
Yes. The Tax Policy Committee concluded that once speculative finish-out had been completed, later modifications for the actual tenant were taxable.
Did Texas treat repainting and reroofing as nontaxable real-property maintenance, and could repairers accept exemption certificates?
Repainting and reroofing remained taxable unless performed on a schedule under the proposed maintenance rule. Repairers and remodelers could accept exemption certificates when they had no reason to qu…
Was a bail-bond service among the services made taxable by Texas's recent 1988-era sales-tax law change?
No. The Comptroller said the bail-bond business did not fall within any service made taxable by the recent law change.
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